Top 5: the most crypto-friendly countries (and their taxes)

We have a few bans against cryptos around the world, but we also have a lot of governments being more flexible, and even friendly with this entire ecosystem. That’s why a good number of startups, entrepreneurs, and individuals have decided to move into these crypto-friendly countries, where they can thrive and grow.

However, it’s worth noticing that “friendly” doesn’t mean lawless. These territories also have their own laws and regulations for the use of this kind of asset, including (or not) some taxes. Let’s check them quickly.

Malta

Malta architecture. Image by Michelle Maria / Pixabay

In July 2018, this island became one of the first nations regulating cryptocurrencies to promote their use without crimes. To make it possible, its parliament passed three bills about it: The Digital Innovation Authority Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act

To sum it up, cryptocurrencies are completely legal and the companies related to them will find fertile ground in there. About the taxes, those depend on the type of asset. They differentiate between two main types: coins and tokens. In both cases, they usually receive taxes (35%) only if the transaction was made specifically as a form of income.

Estonia

Historic center at Tallinn, Estonia. Image by Makalu from Pixabay

Indeed, they’re considered the first country to offer the system “e-Residency”. This is a registration program for foreign entrepreneurs, that can give them an identity as an EU-based company in less than 30 minutes. Naturally, this has been a huge attraction for numerous crypto-startups.

Since later 2017, the national lawmakers modified their Anti-Money Laundering (AML) laws to include the definition of cryptocurrencies as “value represented in digital form”. They’re legal there. However, there are no specific regulations about it so far, except for crypto-exchanges: they need two licenses to operate. As for the taxes, there’s a corporate and income tax accounting for 21% when applicable.

Singapore

Singapore city. Image by Pexels from Pixabay

Last year, the Payment Services Act finally came to effect. With this law ongoing, the crypto-companies (and especially the exchanges) should report to the Monetary Authority of Singapore (MAS) and obtain a license from it to operate.

Beyond that, cryptocurrencies are considered as goods and not as money. The Initial Coin Offerings (ICOs) should be licensed if the token is considered a security; and, as of November 2020, 234 blockchain companies were operating in Singapore. Considering they just need to pay around 7% in taxes per income, the number is probably bound to grow.

Japan

Tokyo, Japan. Image by Sofia Terzoni from Pixabay

Since April 2017, Japan recognizes Bitcoin and cryptocurrencies as legal property and payment methods. The regulations were flexible even for crypto-companies till some high profile hacks appeared on the horizon. That’s why, since the last year, the crypto-exchanges are supervised by Japan’s Financial Services Agency (FSA) and they need to obtain a license to operate in the country.

The taxes per income, according to the National Tax Agency, vary from 15% to 55%. Your average guy with cryptos is probably free of them, though.

Switzerland

A glimpse of Zug, Switzerland. Image by Vinny Kapoor from Pixabay

Of course, cryptocurrencies are legal (and widely accepted) in this territory. The Swiss Financial Market Supervisory Authority (FINMA) only licenses the cryptocurrency exchanges and published a set of guidelines for the ICOs.

Beyond that, as declared by the Crypto Valley Association, “The Swiss financial market regulator, FINMA, encourages self-regulation rather than onerous top-down regulation, and is open and easily accessible for developing improved regulations”. The taxes vary between 0% for individuals and 7–22% for companies, depending on the region.

Bonus: Liberland

According to their constitution, “No law shall abridge the right to issue and/or use any commodity or item as currency or provide any incentive in that respect unless any party to the transaction is legally prohibited from possessing such commodity or item”. So, cryptocurrencies like Bitcoin and Monero are very popular. Besides, the country issued recently its own native crypto, the token Merit (LLM). And they’re totally tax-free, of course.

All this if they reach international recognition. For now, we’ll have to settle for our old crypto-friendly countries.

Originally published at https://blog.alfa.cash on February 10, 2021.

We are an eight-year-old and duly regulated cryptocurrency exchange. We offer crypto-fíat and non-custodial transactions, and valuable knowledge in our blog.